Digilant

Digilant managing director Simon Haynes tackles the latest issues in the digital advertising industry.

27 June 2013 - 11:14am | posted by | 0 comments

Where have ad exchanges gone wrong?

Where have ad exchanges gone wrong?Where have ad exchanges gone wrong?

The exchange space is absurd.

Disagree? Okay, open another browser and visit beyondjane.com. Now… wait for about 60 pixels and cookies to load onto your computer. Why on earth would a site, ostensibly about women’s lifestyle, need to drop 60 cookies onto your browser just for visiting its homepage? As someone who’s been in this space a while, I could perhaps explain the existence of 25 or 30 or those, which doesn’t make it any more acceptable. But the point is to show how far astray we’ve gone during the ad exchange business’s first five years.

We get so involved in all of the data, tech, and great ideas that have sprung up in this space, that sometimes we forget about the concept that started it all. Exchange. That word - or the spirit of that word - is what got me so genuinely excited about this space all those years ago. I’d come from the contractually encumbered agency world, rife with subjectivity and schmooze. Like many, I found the advent of a truly open-market exchange refreshing. I could get information about every single impression I bought and, even better, that I could name my price. The Exchange isn’t just a marketplace; it’s the fundamental ideas that have predicated most of the great tech, data, analytics, and strategy behind that marketplace. It’s all based on the concept of a free, open, data-rich exchange that’s mutually beneficial to buyers and sellers. That foundation has become cracked.

When I started, I found much of the original promise of The Exchange to be true. But, as with many positive concepts, we - in this very cluttered space - have managed to mess it up. I could talk about overwrought data harvesting, how advertisers are being taken for a ride along the attribution path and how the freedom of buying has actually resulted in less knowledge of where an ad is running. Instead of doing that, I’ll ask a rare question: where have exchanges gone wrong?

Exchanges have not fulfilled that original vision, one of an open, transparent, and fair ad commerce environment. The exchange space isn’t fair. I use this word in the way you might describe a rugby game as fair. There is at least a basic assumption that all are held to equal and transparently understood rules and circumstances, so that those with the advantages of nature, intelligence, or preparation have an opportunity to prevail. That’s not the case with exchanges. Sellers are given unilateral transparency and tools to optimize yield and make money, while buyers don’t benefit from those advantages. There are nuanced technical and economic disparities, as well -- including the very nature of how some exchange tags operate within a publisher’s page code -- but these merit separate discussion. I should mention here that I’m not condemning all exchanges, because they’re not all the same in this respect; some are closer to equitable than others. I am, however, saying that much of the correction can and should come from the role The Exchange plays these days.

To date, the ecosystem has been built to support the onboarding of publishers, some of whom have direct and immediate financial incentive to act badly, hire click bots, falsify traffic, dishonorably harvest data, and contribute to the encroachment of “false” advertising. (I use that word, in quotes, because the one I’d really like to use would be censored).

We now face the danger of the inevitable reaction to such an imbalanced ecosystem -- that advertisers will become disgusted with this space and turn their backs.

Don’t get me wrong here. Onus falls on everyone: agencies, buying platforms, advertisers, pubs, SSPs. But the first big fix is for more exchanges to get back on board with this original idea (crazy as it seems) of a fair space, of an even playing field with no unnatural advantage for buyer or seller. When this happens, we’ll get back to the original vision, the original promise of this space.

Let me paint a picture of how that will look. Illegitimate publishers will no longer be compensated for phony traffic and clicks, more premium advertisers will test the exchange space and even see good results (dare I say to non-DR ends), and top-tier publishers will feel compelled to trade their best inventory and will get good prices for it. And one larger thing can happen, too: The tech that comes out of this healthier ecosystem will be truer, smarter, and far more advanced than that born from the dirtier structure.

Players on both sides need to shape up, but it’s The Exchange that needs to make the game a fair one.

Simon Haynes is managing director UK at Digilant

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